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Working with vulnerable customers

vulnerable customers vulnerable customers
Annie Kane 8 minute read

Last year, a new Banking Code of Practice was rolled out, which brought in a higher standard of customer care when dealing with individuals and small-business customers — particularly vulnerable customers, co-borrowers and guarantors. Find out more in this special round-up.

On 1 July 2019, the Australian Banking Association (ABA) introduced a new Banking Code of Practice that brought in a higher standard of customer care when dealing with individuals and small-business customers.

Following on from major concerns surrounding financial abuse, as highlighted during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the finance industry has been hard at work developing new training to ensure that vulnerable customers are treated with extra care.

As such, the new banking code now requires lender signatories to “take reasonable steps” to confirm that any co-borrower on a loan not receiving a “substantial benefit from the loan” (e.g. an equitable interest in the asset or payment of debts) understands the risks involved before approving the loan.


Moreover, the code states that lenders would not approve a co-borrower loan in this instance unless they are “satisfied that [they] are not experiencing financial abuse”.

What is financial abuse?

According to ASIC, financial abuse occurs when another person (whether a partner, child, another family member or friend) manipulates a person’s decisions or controls their access to money or other property without consent. 

According to the financial services regulator, warning signs of a financially abusive relationship can include:

  • Someone else controlling the victim’s access to bank accounts or other money.
  • A victim, particularly an elderly person, being forced to change their will.
  • Family members or friends pressuring elderly persons to appoint them as enduring power of attorney.
  • Large or unexplained withdrawals or transfers from the victim’s bank accounts.
  • Someone failing to provide the victim with enough money to cover living expenses.
  • Someone denying the victim with access to the internet, phone or transport, which prevents the victim from working or studying.
  • Someone taking out loans or running up debts in a family member’s name, or pressuring them to sign up for a loan.
  • Relationships where the victim needs permission from another person to spend their own money.
  • Someone selling (or threatening to sell) the victim’s property without their permission.
  • Another form of abuse (such as physical abuse, sexual abuse, psychological abuse or neglect) may also be indicators of an abusive relationship and can sometimes be a sign that financial abuse is happening, according to ASIC.

While lenders had previously been rolling out their own individual requirements to brokers regarding financial abuse – including by asking brokers to complete a financial abuse declaration form, which both the Finance Brokers Association of Australia (FBAA) and the Mortgage & Finance Association of Australia (MFAA) had urged members not to sign due to concerns over potential litigation and professional indemnity insurance breaches – the three associations joined together at the end of last year to develop a “common approach” to working with vulnerable customers.


The joint project of the ABA, MFAA and FBAA culminated in a new training program for brokers that aims to help the channel contribute “more meaningfully” to this effort by providing information on how to identify potential financial abuse more effectively and the new requirements of the banking code. 

What the training entails

The online training offered by both the MFAA and FBAA covers some of the sections of the new Banking Code of Practice that are relevant to brokers in order to “provide a significant step-up in protections for customers and in ensuring extra care is taken with customers who may be vulnerable”.

Delving into financial abuse, the training includes:

  • the changes to guarantors and co-borrowers and the new rules regarding how they should be treated under the Banking Code of Practice;
  • what constitutes “substantial benefit”;
  • what brokers need to understand around guarantor protections;
  • the new broker confirmation details; and
  • how to identify the potential signs of financial abuse and examples of it (such as an applicant appearing withdrawn or only one applicant communicating with the broker).

These examples and tools were drawn from a range of sources, including the content that the banks put their own staff through for the new banking code training, alongside Lifeline resources dealing with how to identify signs of financial abuse.

By working together to build the standardised training, the new module means that brokers can satisfy the lender requirements through their member organisation, without having to undertake training from each individual lender.

The mandatory training is now a professional membership requirement of the MFAA and FBAA (such as AML/CTF training), and an online refresher course will need to be undertaken every two years.

The assessment requires an 80 per cent pass rate.

It is hoped that training will help mortgage brokers:

  • understand the Banking Code of Practice and who it is designed to benefit;
  • understand the code’s obligations and a broker’s responsibilities in relation to co-borrowers and guarantors;
  • recognise the circumstances where customers may experience vulnerability; and
  • be better able to identify potential financial abuse. 

In a joint statement, the ABA, FBAA and MFAA commented: “The royal commission highlighted the importance of treating vulnerable customers with extra care.

“The training module will help brokers contribute more meaningfully to this effort by providing them with information about the banking code and guidance to help them identify potential financial abuse more effectively.”

More information on financial abuse training can be accessed through the FBAA and MFAA member websites.  

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vulnerable customers
Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.



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